How fresh of a “fresh start” is filing for bankruptcy?

How fresh of a “fresh start” is filing for bankruptcy?

Filing for bankruptcy is like a ray of light at the end of a dark tunnel. People often say that you are “wiping the slate clean” or getting a “fresh start” by filing for bankruptcy. This is true, but there are some caveats that you need to be made aware of.

In this blog, I will give you a run down of how much of a “fresh start” is filing for bankruptcy. Keep reading to learn more about this benefit of filing.

Types of Bankruptcy

There are three different types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13. Chapter 7 is personal bankruptcy and Chapter 11 is for corporations. Chapter 13 bankruptcy is where you make payments on your debt.  I will help you decide which type of bankruptcy you should file. If you file a Chapter 13, I will negotiate a payment plan that is acceptable to all parties and your debts will be discharged after the payment plan is complete. For Chapter 7, all credit card debts and “unsecured” debts are eliminated and you are given a chance at a new life after 90 days. Chapter 13 gives you a “fresh start”, it just take a bit longer.

Rebuilding Your Credit

You are probably wondering how long it takes to rebuild your credit. Filing for bankruptcy does not mean 7 to 10 years of bad credit. It will typically take a couple of years before you regain a stronger credit score. Credit card companies may offer you new credit cards right after the bankruptcy is over, but they will have high interest rates. In one of my past blogs, I talk about some tips for rebuilding your credit. If you have dreams of owning a home or purchasing a new home, you can typically qualify for a mortgage in two years.

Debts Discharged in Bankruptcy

The vast majority of debts get discharged in bankruptcy, but there are a few exclusions for public policy reasons. Child support, taxes, and student loans are not able to be discharged.

A “Fresh Start”

A bankruptcy is an injunction that makes a debt uncollectible. The debt is erased and all activity on the debt must stop from the day you file bankruptcy. Creditors can also attempt to collect from another source, such as a co-signer who has not filed bankruptcy.

I have over 37 years of experience. Let me guide you through the bankruptcy process. Contact my office today to schedule a consultation. There is life after bankruptcy and it starts here!

Read the top myths about bankruptcy.